Poddar Developers – India – Micro Cap

I admonished to keep at less than 1% for large portfolio (20 INR Crore+) and < 2% portfolio weight for small portfolio ( < 1 crore INR) for this micro cap.There is some information received through grapevine and other market channels, which to be fair should be in the market to keep symmetry, even though it means short term stupidity.– The company results are always chequered with profits booked only on actual sale and project completion– It appears that there will not be sale of buildings and houses over the next couple of months as multiple projects are mid way construction, March 2015 could be a better quarter– I wished the company to continue in low cost housing < 25 Lacs INR apartment and scale out to other states, but the company is acquiring land for mid income housing in Maharashtra – 60 Lac – 1 Crore INR range of apartmentsSo expanding out the low income model in other states is also looking unlikely in short term. Becoming a stronger regional player is a bigger focus than becoming a low cost housing specialist pan India in the short term– I also wished the company to get into NBFC space in low cost housing as Gruh and Repco, given that Dipak Poddar is one of co-founders of Bajaj Finance (first cousin of Rahul Bajaj), co-promoter of Bajaj Auto, and also the promoter of Poddar Developers Ltdhttp://www.bajajfinserv.in/wealth/board-of-directors.aspxThe company has long term plans to get into it but NBFC business is looking unlikely in short term as company has hands full with housing projects. – One the positive side company has taken in well the Corporate Governance message and expects to improve it in subsequent year.– We have also learnt that in real estate sector, company provides highest levels of transparency to purchasers/end users of apartment by publishing prices on the website. This is unmatched.

I had spotted Atul Auto 20 Rs and invested for myself and partnership in 2012 @ 35 Rs and @45Rs respectively, based on advance from customers (CMP 377 Rs). I see similar strength in Poddar Housing product.

“Besides, we will fund the expansion through internal accruals. We are not keen on raising funds through debt or equity, mainly because of high interest rate and higher cost of valuation.”

– Remains a developing story and likely to stay sideways for next 6-9 months. A product that customer pays for in advance is typically a Bajaj Auto scooter in monopolistic India of 1970s.

Disclosure: Invested. Views are personal notions and do not represent any organisation or company. I am not an investment adviser. Investment in stock market can (and many a times do) result in loss of principal capital.

But active and pasisonate investors generally do not get to hold stocks for long term. A relative of mine who relies on me for investments, I got that person Astral Poly Technik in 2010 at 20 Rs (pre split) and is still holding it, but I am not (CMP 830).

hi amitI think if you are looking at poddar, you should look at ashiana too. not necessarily for investing, but just to look at a similar model and how a good management is building a similar company.also they are slightly further down the same road as poddar developers on the same path to becoming a regional player in mid housing segment

Saw a couple of posts on fundooprofessor.wordpress, still have not delved into the company.

Last year I was searching for “retirement villages” business and Ashiana appeared to be the only “listed” company in India in that segment. Don't like the concept of retirement village/graves/cemetory but business is yummy.

“Opportunity cost is a huge filter in life. If you’ve got two suitors who are really eager to have you and one is way the hell better than the other, you do not have to spend much time with the other. And that’s the way we filter out buying opportunities”

“If you took the top 15 decisions out, we’d have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor. With all that vigor, you only made a decision every two years. We do more deals now, but it happened with a relatively few decisions and staying the course for decades and holding our fire until something came along worth doing.”

Dear Amit,I have worked closely with this (Poddar developers) company during 2006-07 and have also met Mr. Rohit Poddar to understand his plan. Company was earlier known as “Wearology” and they had a project in Karjat in Mumbai. Company had a very big plans with their land bank. And stock rose from double digits to 200 mark in a matter of 8-10 months. Mutual funds like DSP Merill bought stakes @ 215. However, what company did was very unethical. This land bank was in a subsidiary “Gopi Resorts” and one fine day it sold of this subsidiary. Company did not had any business on standalone basis. This raised a very serious issue on its corporate governance. I would just raise a red flag here. I understand you would have done your research but still this my 2-cents. I am open to critics as well as to change my perception about the company, if you can share your thoughts in detail. Probably I would be wrong.

Hi Amit,Thanks for digging up Info – I do agree that Poddar has a sustainable FLOAT available to them in form of customer advances,I have a small write up in case you are inclined – http://wp.me/p4bScp-aRMy question Can management deliver the scale with ever increasing projects in pipeline ? I have no insights to second layer at the company but is it competent to deliver 3-4 big housing projects in parallel ?

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Amit Arora

B.Com(Hons) Gold Medalist - Delhi University, MBA.

Served United Nations between 2001-2006 in Europe.

Since 2007 consultant for Inland Revenue, Ministry of Economic Development, Ministry of Social Development, Ministry of Justice, Ministry of Business Innovation and Employment (NZ Govt. Organisations).